As readers of this Louisville legal blog may know, bankruptcy is a legal process that allows a person to manage their debts, pay off financial obligations and set themselves up to emerge from the process with a clean monetary slate. There are two main types of bankruptcy that individuals may choose to pursue to take control of their debts - Chapter 13 bankruptcy and Chapter 7 bankruptcy. This post will briefly discuss Chapter 7 bankruptcy and will focus its content on the factors that may limit a person's ability to use it as a means of achieving financial freedom.
The Chapter 7 bankruptcy process requires a person to liquidate much of their property. Liquidation is the selling off of items; once a person has liquidated those assets that are not protected by exemptions the proceeds of the liquidation are used to pay off the individual's creditors. Chapter 7 bankruptcy can be a difficult process for some but it is often an effective means of helping a debtor find a fresh start.
However, not all individuals are eligible to file for Chapter 7 bankruptcy. For example, if a debtor makes too much money and can begin to pay off their debts without the protections of the Chapter 7 process then they may not be able to use it. Also, if a person has used either Chapter 7 bankruptcy or Chapter 13 bankruptcy in the past then they may not be able to file for Chapter 7 bankruptcy again until a certain period of time passes.
Debtors who use bankruptcy must abide by certain conditions in order to stay eligible for the protections. If they fail to complete the credit counseling requirement of the process or fail to truthfully handle the sale of their assets through liquidation their cases may no longer be allowed to remain in the bankruptcy courts.
Individuals who are struggling with overwhelming debts have options through bankruptcy. With the help of experienced attorneys, individuals can attain financial freedom and start their lives over on strong financial footing.